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The Court of Appeal’s ruling in the case of vicarious liability brought against DMS, which claims to have ‘the most complete fund governance platform’ in Cayman, for the alleged wilful neglect against Dawn Cummings, leaves more questions than answers.

This case goes back a very long time. The NED first covered it in November 2012; a lot has been written about it since then.

Across many industries, including asset management, people are using this crisis to ask fundamental questions about their business practices. This is now beginning to happen in fund governance too. A lot of what we have all taken for granted is being re-evaluated at present.

Is it time to reform director residency rules? If so, in which way? Should they be applied more or abolished? They are wildly inconsistent at present. For example, Ireland requires two local directors, Cayman and Luxembourg none. That does not make sense.

The travel restrictions brought in as a result of the coronavirus crisis is either going to show the fund governance world that you must have local, resident directors or that they are unnecessary. It has to be one or the other: it cannot be both. Which is it likely to be?

It’s still early days in this crisis but what has happened looks certain to change fund governance practices in a number of ways, especially in improving transparency.

The inability to travel is making transparency in fund governance yet more important than it already was. ODD professionals that The NED has talked to since the onset of the pandemic say that the days of jumping on a plane to do an overseas due diligence trip will likely be heavily curtailed for a long time to come.

At least up until the onset of the coronavirus crisis private debt, which is a relatively new asset class, had been booming. But whilst there is a lot of information that one can find this strategy there is really nothing at all on the governance arrangements of private debt funds.

If the tide now goes out on the private debt market, revealing yet more frauds, (particularly in the US), will a lot reason be because of the poor fund governance structures?